The strong jobs report provides further confirmation that the
U.S. economy is leaving behind the winter restraints. This means
that economic growth should materially improve in the current
quarter from Q1's anemic pace. The bond market's muted reaction
to today's report notwithstanding, this is an all around positive
development.

A total of 288K jobs were created in the economy, significantly
above consensus estimates and what we saw from the payroll
processor ADP on Wednesday. Importantly, the tallies for the
prior two months were revised higher by a total of 36K, with
March going up to 203K (from 192K) and February going up to 222K
(from 197K).

The private sector added 273K in April, up from 202K in March,
with the gains coming particularly strongly from professional and
business services (up +75K in April), retail (+35K), food
services and drinking places (+33K), and construction (+32K).
Manufacturing jobs were little changed in April, even though the
employment sub-index of the ISM index showed strong gains on
Thursday.

The unemployment rate dropped by a very big 0.4% to 6.3%,
primarily due to drop in the labor force participation rate. The
average work week and average hourly earnings were
unchanged at 34.5 hours and $24.31, respectively. Average hourly
earnings have gone up +1.9% over the past 12 months. The labor
force participation rate reversed the modestly improving trend of
the last few months, dropping by a very high 0.4% to 62.8%. The
drop in the participation rate runs counter to the view that an
improving labor market will prompt previously discouraged workers
to rejoin the labor force and start looking for work.

Today's jobs report adds to the growing list of recent economic
readings that are pointing towards improvement in the economy
after the soft readings at the start of the year. We saw in
the Q1 GDP report that the U.S. economy effectively flat-lined,
putting a halt to the brief growth ramp up of the second half of
2013. But the tone of economic data improved in March and the
trend appears to be holding up in April numbers, as today's
non-farm payroll reading and Thursday's ISM survey show.

This is strengthening the hope that Q1 will remain the
low-point for the year, with growth steadily improving from Q2
onwards and reaching above +3% in the second half of the
year.